South African electricity public utility Eskom has demanded ZAR2bn ($156m) penalty payment from Glencore‘s Optimum Coal Mine for supplying poor quality coal.

Eskom acting CEO Brian Molefe said that the inferior quality coal resulted in weak performance and is causing damage to its equipment and affecting the power plants’ overall performance.

Disputing Eskom’s claim Glencore said the mine commenced business rescue procedures as a result of its contract to supply coal to Eskom at a lower cost.

Glencore claims Optimum Mine is in financial trouble as a result of its agreement with Eskom, which was renewed in 1993.

Eskom no longer wants to invest in the capital expenditure of these mines and said it wants to exit the three decade contract.

"Eskom acting CEO Brian Molefe said that the inferior quality coal resulted in weak performance and is causing damage to its equipment."

Last week, Glencore said that following an agreement signed, Optimum supplied 5.5 million tonnes of coal a year to Eskom at a cost that is significantly less than the expense of production for a number of years.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Eskom announced in June that it was not willing to renegotiate the agreement and terminated the framework agreement.

However, in early July, Optimum obtained additional funding from Glencore to enable it to continue coal supply.

Glencore said that it will provide all necessary assistance to the business rescue practitioner during the process in order to develop a business rescue plan.